Crow design, inc., is a web site design and consulting firm. the firm uses a job

Question

Crow design, inc., is a web site design and consulting firm. the firm uses a job order costing system, in which each client is a different job. Crow design traces direct labor, licensing costs, and travel costs directly to each job. It allocates costs to jobs based on a predetermined indirect costs allocation rate, computed as a percentage of direct labor costs. At the beginning of 2011, managing partner Sheila biggs prepared the following budget: In October 2011, Crow design served several clients, Records for two clients appear here: Compute crow design's predetermined indirect cost allocation rate for 2011. Compute the total costs of each job. If Biggs wants to earn profits equal to 20% of sales revenue, how much should she charge each of these two clients? Why does crow design costs to jobs?

Explanation / Answer

req 1

Req2

* Direct labor Allocation rate 1,000,000/6250160

Req 3

Req 4

help the company fix the selling prices that cover all costs and contribute to profit.

help in Assigning costs to individual clients

help in Crow Design control costs .

Direct Labor Cost 1000000 Indirect Cost Support Staff salaries 120000 Computer Leases 45000 office supplies 25000 office rent 60000 Budgeted indirect Cost 250000 Predetermined Indirect Cost allocation rate=250000/1000000 0.25

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